Unit 7 - Comparative & Absolute Advantage

Absolute Advantage

• looks at who can produce more with the same resources or who can produce the same output with less resources
• ex: Papa John's producing 20 pizzas while McDonald's produces 4

Comparative Advantage

• who can produce with the least opportunity cost

Input vs. Output

• Input
• Examples:
• # of hours to do a job
• # of gallons of paint to paint a house
• # of acres to feed a horse
• Output
• Examples:
• miles per gallon
• tons per acre
• words per minute
• apples per tree
• computers produced per hour